Tokyu Fudosan Holdings posts record revenues in FY 24

Tokyu Fudosan Holdings Corporation announced its FY 24 results on May 8, 2025, highlighting record highs in both revenue and profit. Operating revenue was up by 4.3% YoY to JPY1,150.3bn, operating profit rose by 17.0% to JPY140.8bn, and net profit grew by 13.2% to JPY77.6bn which was driven by strong results in the condominium and real estate sales agent businesses, supported by a robust property market, and high demand in the hotel sector.

Established in 2013 and headquartered in Tokyo Japan, Tokyu Fudosan Holdings Corporation is the holding company for the Tokyu Fudosan Holdings Group. The group oversees five core operating companies: Tokyu Land Corporation, Tokyu Community Corp., Tokyu Livable, Inc., Tokyu Housing Lease Corporation, and National Students Information Center Co., Ltd. It is engaged in the business of real estate development, building management and operation, real estate agent services, infrastructure development, and real estate investment. The group has a global presence, operating in China, Taiwan, Singapore, Indonesia, Palau, and the US.

The company's business segments are Urban Development, which contributes 30% of revenue; Strategic Investment at 10%; Property Management & Operation at 32%; and Real Estate Agents at 30%. Intersegment transactions offset overall revenue by 2%. As of March 2024, Tokyu Fudosan Holdings had approximately 30,000 employees.

Robust long-term performance

Tokyu Fudosan Holdings achieved 5.2% CAGR in revenue from FY 21 to FY 24, reaching JPY1,150.3bn in FY 24. Operating income increased by 18.9% over the same period, reaching JPY140.7bn in FY 24. Net income grew at an impressive CAGR of 30.2%, reaching JPY77.6bn in FY 24. Additionally, operating margins expanded from 8.5% in FY 21 to 12.2% in FY 24. Similarly, net margins increased substantially from 3.6% in FY 21 to 6.7% in FY 24. The company’s D/E has declined from 2.4x in FY 21 to 2.1x in FY 24.

Analysts estimate an anticipated net revenue CAGR of 4.3% over FY 24-26, reaching JPY1,250.3bn. In addition, they estimate operating income to increase by 8.9% CAGR to JPY155.4bn in FY 26 and margins of 12.4% in FY 26. Net profit CAGR is expected to rise by 8.5% CAGR, reaching JPY87.5bn with margins of 7.0% in FY 26.

The company’s local peer, Mitsubishi Estate Co. achieved a total revenue 3-year CAGR of 5.4%, reaching JPY1,579.8bn in FY 24. Its operating profit CAGR was 3.5%, reaching JPY309.2bn, and its net profit CAGR was 6.9%, reaching JPY189.4bn in FY 24.

Advancing towards 2030 targets

By promoting business restructuring and other measures, the company has achieved significant profit growth beyond planned figures, reaching its 2025 operating profit target of JPY120bn and net income target of JPY65bn two years ahead of schedule.

Under the new medium-term management plan (2030), the group will enter the resilience phase of its long-term management policy. This plan aims to build a solid and distinctive business portfolio to drive earnings growth, while enhancing efficiency and tolerance. The company will focus on three strategic themes expected to benefit from evolving societal needs. These themes are promoting the Shibuya strategy, establishing a GX business model, and expanding glocal business operations. By leveraging synergies between businesses, the company aims for high growth and a resilient portfolio that captures diverse market characteristics and expands stable profits.

Despite uncertainties such as rising inflation, interest rates and US tariffs, the company anticipates revenue and earnings growth in FY 25, driven by strong performance in its real estate and hotel businesses, underpinned by favorable market conditions. The company projects growth of 10.4% to JPY1,270.0bn in operating revenue, 8.7% to JPY153.0bn in operating profit, and 9.5% to JPY85.0bn in net profit. Additionally, it plans to enhance shareholder returns by increasing EPS through sustainable profit growth.

Financial targets for FY 30 include achieving an operating profit of at least JPY220bn, net profit of at least JPY120bn, ROE of 10% or more, ROA of 5% or more, D/E of 1.8x or less, and maintaining a dividend payout of at least 35% annually.

Anticipated high dividend yield

Tokyu Fudosan Holdings has maintained an average dividend yield of 3.3% over the past three years. In FY 24, the company paid a dividend of JPY36.5 per share, resulting in a dividend yield of 3.7% and a payout of 33.6%. Analysts anticipate that the dividend will increase to JPY43.4 per share by FY 26. For FY 25, the company aims to maintain a dividend payout of at least 35% and continue with a progressive dividend policy through FY 2027.

The 10 analysts covering the stock have varied, although generally positive opinions: four have ‘Buy’ ratings, two have ‘Outperform’ ratings, and four have ‘Hold’ ratings for an average target price of JPY1,191.0, implying 11.7% upside potential at its current level.

Over the past year, the company's stock has fallen by about 7.0%. In comparison, Mitsubishi Estate’s stock declined by 10% over the same period, reflecting a more severe fall than Tokyu Fudosan Holdings. The company is currently trading at a P/E of 10.2x, which is lower than Mitsubishi Estate's 18.5x.

Tokyu Fudosan Holdings appears to be set for growth, driven by the continued anticipation of a strong real estate sales market, plans for increased revenues and profit, and progressive dividends aimed at driving shareholder returns. Analysts are optimistic about its revenue and profitability prospects by FY 26. However, the company also faces risks, including rising interest rates, political uncertainties, fierce competition, changes in foreign exchange rates, and sensitivity to macroeconomic conditions which could impact its financial performance.